MSI Annual Reports: 1950s and 60s

These are scans of the 1950s and 1960s MSI Annual Reports I had. They are a real time capsule; no ZIP code for the address, Leave It To Beaver-like scenes of domestic bliss, references to the claimsmen, very cool cars. These start before MSI even had the 1919 University building and take us up through the moon landing.

A big year. In October, the company started construction on the 1919 University location. It is to be finished next fall. At the time that the Arden Hills building was up for sale in 2013, we came across a little trophy with a kind of grungy horseshoe mounted on it. Apparently, the horseshoe was found during construction. The 1919 University location had been the site of a Saint Paul horse market which burned down at some point.

They were also writing a lot of municipalities, counties and state-owned vehicles in Minnesota and Wisconsin. MSI would have a dominant position in Minnesota townships into the early 2000s. This annual is full of cheesy graphics. Also, the language sounds a bit archaic in some places, like this, referring to the agents:

The Mutual Servicemen and their families attend your schools and churches, shop where you shop, and live as you live

It was pretty clear it was all men. In another context, talking about small business insurance, the report mentions how you can get insurance on key men. Women's lib lies in the future.

In many ways the year of 1956 was a difficult one for Mutual Service operations. Competition within the casualty insurance industry, which had been growing steadily during recent years, reached a particularly intense level during 1956. The appalling toll of auto accidents on our country's streets and highways continued unchecked—and, in fact, reached an all-time high.

Fortunately, we have our cooperative principles to help us.

...all of our efforts were shaped and guided by the sound cooperative principles that are the rock-bed foundation of Mutual Service: ownership and government in the hands of the people served, and operations aimed wholly at helping the people served.

For Mutual Service Casualty, 1957 was a year of substantial growth, rather than financial gain.

MSI is expanding:

During 1957 we began to expand our service area beyond our present operating territory. Initial steps were taken to obtain licenses for Mutual Service in its tenth state of operation-the State of California..

They were still big on the cooperative thing:

Activities such as these illustrate how Mutual Service performed its partnership role. Along with this regional cooperative activity goes active participation in state associations of cooperatives, the Cooperative League of the U.S.A. and, through it, in the International Cooperative Alliance.

Another trying year. The photo of the building on University now shows it with four floors, so somewhere along here they added two to the original two. This must have been common in those days, as when I worked at ALLIED Group in Des Moines, they'd started with 2 floors, added two more, and could have added two more. The elevators even had blank buttons for the potential 5th and 6th floors. Anyway, back to results, where some things never change, do they?

The drop we had in casualty premium volume last year was both necessary and expected. It was due to the many steps we had to take to arrest our underwriting loss trend. These steps included rate increases in those areas and classes of business that were continuing to produce losses. In all cases these rate increases were essential because of rising claim costs in our area for our company and for other companies as well. We also strengthened our risk selection standards to weed out loss-producing business as much as possible.

That cooperative link is proving helpful, though:

Two of our regional sponsoring organizations, Midland Cooperatives, Inc. and Central Cooperatives, Inc., invested one million dollars in surplus notes in Mutual Service Casualty.

This seems odd now, but Minnesota had the worst auto results in the nation.

Among all 50 states and Canada, Minnesota has the highest automobile insurance loss ratio. This condition has been developing for the last ten years and affects all companies with business in the state, but it is particularly hard on companies like Mutual Service, whose business is heavily concentrated in this one area..

There's even a picture of a black guy in the report! Turns out he's a cooperative enthusiast:

Under the auspices of the Agency for International Development, William B. Lubale-Nabyama, assistant secretary of the Busoga Growers Cooperative, Uganda, established his headquarters in the Mutual Service home office for a one-year period of university course work and practical experience in cooperative insurance.

This is well before Idi Amin. I wonder what the cooperative insurance market is like in Uganda these days.

The Company hits 30 years old. I like this bit from the President's letter:

Additional steps were taken to increase the economies effected by our modern computer and data processing systems. And we expect that these steps will lead to further economies and better service in the future.

I expect some of that modern computer and data processing stuff was still in use until MSI shut down its systems. It's the eternal promise of data processing, isn't it, that there'll be increased economies from the modern software and systems. It's amazing how many projects bog down in the mire of implementation.

One way that insurance companies are a force for good is pushing for automobile safety. The cars pictured in these old annual reports are pretty cool, streamlined and tailfins, a self-assured design language that remains classic. They were also dangerous as hell; crappy tires, poor brakes, lousy seatbelts, glass that splintered, seats that came loose, sharp metal dashboards, even poorly-conceived windshield wipers. Not to mention inefficient and polluting. MSI was worried about some of this:

One of the great tragedies of modern-day society, which is also the auto insurance industry's Number One problem, is the climbing toll of highway deaths and injuries. Last year it reached an all-time high. Many of those lives and injuries could have been saved through the use of seat belts. Mutual Service's "Buckle Up and Live" program was pushed hard last year, and we are pleased with the widespread support it continues to receive.

A plain, no-nonsense presentation of the financials. Other things are evolving: the return address on University now has a ZIP code, 55104 on the annual, but the policy pictured on the back cover still shows 1919 University Avenue, St. Paul, 4, Minnesota. There were big tornadoes in the Twin Cities this year:

Twin Citians remember May 6, 1965. They remember it as a time of natural fury and disaster when tornadoes struck their metropolitan area.

It must have been scary:

Fear was the companion of thousands.

Very literary. Of course, in those days they didn't have Doppler radar and color tvs showing the storms coming, so it was a more unpredictable and more frightening. Sixteen people were killed in these storms. The report still refers to the excellent work by the Mutual Service “claimsmen”.

President Felix Rondeau continues to write about the carnage on the nation's highways, noting that nearly 1,000 Americans were killed and 40,000 crippled or injured weekly. He notes that this affects MSI, and that the company had to raise premiums. According to the NHTSA, there were 47,089 people killed in motor vehicle crashes that year on a population base of 194 million and a death rate of 5.3 dead per million vehicle miles travelled; in 2012, the figures would be 34,012 and 314 million and 1.12 dead per million miles travelled. Cars and roads have gotten lots better.

A good strong year. Mutual Service Casualty retired the surplus notes issued in 1962, well ahead of schedule. MSI starts the work to set up Modern Service Casualty. This would actually come into being in May 1968 but was noted in this annual report:

One of these new developments, started in 1967 and now being completed, is the formation of a new company to write a broader cross section of automobile insurance risks. This facility will enable us to better serve the growing auto insurance market. It will also further implement our full-service concept.

The discussion about no-fault insurance was arising at this time:

The casualty industry, hampered by heavy financial losses in the 60's, now faces new problems. Critics cry for changes in the system for compensating auto accident victims. The most vocal cry is for change from the settlement of auto claims on the basis of negligence law to some kind of compulsory, basic protection plan. Essentially, it means payment of auto claims without regard to fault. To satisfy the public, any change in system should result in lower costs. While most of these proposals attack some causes of higher auto insurance premiums, the major problem is still the rising number and cost of accidents. This cost must be paid regardless of how it is distributed.

They noted some demographic trends:

Our country's population exceeded the 200,000,000 mark in 1967 and, even more startling, about 50 percent were age 25 or younger.

Part of that was me. We moved to Des Moines from Canada in July. Also, I was 25 or younger.

A nice look back at the decade, one of breathless growth. President Kennedy had challenged us to get to moon before the decade was out, and Neil Armstrong first stepped in the dust in July. Vietnam had gotten out of hand. The Civil Rights Act was passed. President Kennedy, his brother and Martin Luther King had been assassinated. Riots had broken out in many cities.

By the end of 1969, the Gross National Product neared the trillion dollar mark, close to doubling during the ten-year period. Personal incomes climbed year by year and for the nation as a whole, unemployment dropped to new lows. Most people had more money to spend for more things, and they did. For many it was, indeed, a period of affluence.

Ah, yes, there's always the eternal hope:

A major step taken last year was the installation of a third generation computer system. It is one of the most modern systems available. We expect to get it "on stream" and fully operational in 1970. This new system will greatly speed up our internal operations and will also help to reduce operating costs

I'm amazed it was the third generation already. One can only wonder at what the first and second generation systems implementations were like.